How New Car Dealerships Work in Canada — And Why It Matters to Buyers
New car dealerships play a critical role in how vehicles are bought, sold, financed, serviced and supported in Canada. Yet for many consumers, dealerships remain misunderstood — often viewed as mysterious, intimidating, or unnecessarily complex.
This page exists to provide clarity.
At TheCarMagazine.com (TCM), we believe better understanding leads to better decisions. Whether you’re researching your next vehicle, watching one of our reviews, or following our social channels, knowing how Canadian new car dealerships operate will help you interpret what you see, what you hear, and what you’re offered when it’s time to buy.
Pricing, Margins, and OEM Control
One of the most important things Canadian consumers should understand is this:
Franchised new car dealerships do not control the pricing of new vehicles.
The OEM (Original Equipment Manufacturer) — the automaker — sets:
- The vehicle’s retail price (MSRP)
- The dealer’s wholesale cost
- The margin available on each vehicle
- Which incentives apply to which models and trim levels
In other words, the manufacturer controls the economics of new vehicle sales. Dealerships operate within those parameters.
What dealerships do control includes:
- Administrative or documentation fees (often regulated or OEM-monitored)
- Pricing of aftermarket products (extended warranties, protection packages, rustproofing, etc.)
- Trade-in appraisal values (within free-market wholesale and retail ranges)
Trade-in values fluctuate constantly based on market conditions, supply, demand, economics and even political influences. While dealerships set appraisals, they do so within a highly competitive and transparent marketplace.
Consumer Protection and Oversight in Canada
Canadian new car dealerships operate under strict regulatory oversight.
Most provinces have:
- Independent consumer protection agencies
- Government-backed automotive regulators
- Licensing bodies with enforcement authority
Failure to comply with regulations can result in fines, sanctions, or loss of dealer licensing. This oversight exists to protect consumers and ensure transparency — and it’s an important reason why franchised dealerships differ significantly from unregulated private sellers.
Yes, Dealerships Are Biased — And That’s OK
Every dealership is biased toward its own products. That’s not a secret — it’s the job.
Sales professionals and product specialists are trained to believe that:
- Their brand is the best choice
- Their models and trim levels are superior
- Their used inventory represents strong value
Consumers shouldn’t fear this bias — they should use it.
Dealership bias can provide valuable insights, especially for buyers who haven’t done extensive research. Many people still shop emotionally, relying on photos, brand loyalty, or a “dream car” mindset rather than data.
Today’s savvy buyers increasingly turn to AI platforms and independent resources — what can best be described as research on steroids. This allows consumers to challenge, validate, or better understand dealership recommendations.
The healthiest buyer-dealer relationships happen when:
- The buyer is open-minded
- The dealer is transparent
- Both sides communicate honestly
The “Buy-Today” Mandate
Every sales representative at a new car dealership has one core responsibility:
Sell a vehicle — today.
That might sound aggressive, but it’s rooted in economic reality.
New car dealerships generate revenue from:
- New vehicle sales
- Used vehicle sales
- Finance, Insurance and After Market Product sales
- Service, maintenance and repairs
- Parts
- Collision and body shops
New vehicle sales drive opportunity across all departments. More new cars sold means more trade-ins, more service visits, more parts sales and more long-term customer relationships.
Add to that compounded competition:
- Competing brands
- Competing dealerships selling the same brand
If a dealership doesn’t earn the sale today, another dealership may — often with a better listener, a clearer explanation, or a more confident ask for the order.
A respectful nudge to buy today isn’t manipulation — it’s survival in a highly competitive marketplace.
Inside-the-Box Thinking (And Why It Exists)
Dealerships are exceptionally good at what they’re designed to do:
- Sell vehicles
- Service and repair vehicles
- Manage inventory
- Process transactions efficiently
What they’re often not designed to do is solve problems that fall outside their core mandate. This can frustrate customers who need extra help, flexibility or creative solutions.
This isn’t negligence — it’s structure.
Dealerships must focus on volume, efficiency and compliance. If they tried to handle every adjacent challenge, they’d grind to a halt.
This is why entire industries exist because dealerships can’t do everything:
- LeaseBusters
- CarCostCanada
- Unhaggle
- Independent service providers
- Specialty automotive businesses
OEMs rely on independent retailers precisely because specialization works better than centralization.
Knowing What to Expect — And What Not to Expect
Consumers benefit most when expectations are realistic.
If a dealership says they can’t help with a specific issue, that honesty should be respected. Transparency is often a sign of professionalism — and many dealerships will provide referrals to trusted third-party providers.
Understanding dealership limitations helps buyers navigate the ecosystem without unnecessary frustration.
Why This Matters to TheCarMagazine.com Readers
Everything TCM publishes is informed by this reality.
Our vehicle reviews, features, social media content and video series don’t exist in a vacuum. They’re shaped by how cars are sold, supported and lived with in Canada.
As TCM builds relationships with a national Canadian Dealer Group sponsor, that partnership enables:
- Deeper education
- Real-world case studies
- Transparent discussions about challenges and solutions
- Content that reflects the full ownership journey
TCM isn’t here to sell cars — we’re here to help Canadians make better decisions, ask better questions, and understand the system they’re navigating.
That understanding benefits everyone:
- Buyers
- Dealerships
- Manufacturers
- And the broader automotive ecosystem